Medtronic, according to the Wall Street Journal (http://www.wsj.com/ ) reported last week 12% growth in net income in the latest quarter, while a strong U.S. dollar and weaker-than-expected sales of some products pressured the company’s revenue and operating margins.The report marks its fourth batch of quarterly results since Medtronic’s $50 billion purchase of Covidien. The acquisition involved Medtronic reincorporating by leaving Minneapolis for Dublin, a so-called inversion deal that reduced the company’s tax burden and drew criticism from U.S. officials.Medtronic said it is on track to achieve its expected cost savings from that acquisition, but said the strong dollar left the company with lower operating margins than analysts had anticipated.
Medtronic Chief Executive Omar Ishrak faced sharp questions on the conference call Tuesday about sales of spinal implants in particular, which fell 2% in the quarter on a constant-currency basis. “We’re going to get this thing fixed,” he said.In an interview, Mr. Ishrak attributed the weak sales of spinal implants to poor product launches.
Ishrak told analysts, “underperformance is not acceptable. The thing is that market is still a very attractive market for us and we’ve got core expertise. So we’re going to get this thing fixed.” He talked how changes in the field level and the overall leadership level will result in steady improvement for the business in the next few quarters.Medtronic is adopting a new strategy in launching new products for lumbar fusion, the VOYAGER fixation system, the Elevate Expandable Cage, and oblique lumbar interbody fusion (OLIF) procedures.”We are excited about the products. Our upstream marketing guys have done a good job, building a number of new products. And now we are focused on the downstream commercial execution, and the launch of those products,” Geoff Martha, president of Restorative Therapies Group, said during the call. “The big change is launching them at scale. So making sure we have the right amount of assets and inventory to launch them at scale, which is a change.”
As Medtronic began selling new implants, it wasn’t prepared to make or ship enough ancillary surgical tools doctors needed to use the devices, he said. The company was also failing to offer doctors enough training on the products to ensure uptake, he added. Medtronic has changed leadership of that business unit and is now spending more “upfront” to ensure it has enough tools for all new products, he said.
About Medtronic
Medtronic plc (www.medtronic.com), headquartered in Dublin, Ireland, is among the world’s largest medical technology, services and solutions companies – alleviating pain, restoring health and extending life for millions of people around the world. Medtronic employs more than 85,000 people worldwide, serving physicians, hospitals and patients in approximately 160 countries. The company is focused on collaborating with stakeholders around the world to take healthcare Further, Together.